In
these actions, Massachusetts Mutual Life Insurance Company
(“MassMutual”) asserts Credit Suisse Securities
(USA) LLC (“Credit Suisse”)[1] violated the
Massachusetts Uniform Securities Act (“MUSA”),
Mass. Gen. Laws ch. 110A, § 410, in marketing and
selling residential mortgage-backed securities
(“RMBS”). Presently before the court are
MassMutual's motions for partial summary judgment, which
seek to establish that Credit Suisse made untrue statements
and misleading omissions in the offering documents of
RMBS.[2] (11-30047-MGM (Dkt. No. 365); 11-30048-MGM
(Dkt. No. 400).) In support, MassMutual relies on certain
facts set forth and acknowledged by Credit Suisse in a
settlement agreement (and an attachment thereto) Credit
Suisse reached with the Department of Justice regarding its
RMBS practices, including the securitizations at issue in
these actions. For the following reasons, the court will deny
MassMutual's motions.

As
clarified at the hearing, both parties agree that the
Department of Justice Settlement Agreement (“DOJ
Settlement”), including the attached and incorporated
Department of Justice Statement of Facts (“DOJ
SOF”), arose out of the same “claims” at
issue here. See Fed. R. Evid. 408(a)(1)
(“Evidence of the following is not admissible-on behalf
of any party-either to prove or disprove the validity or
amount of a disputed claim or to impeach by a prior
inconsistent statement or a contradiction: . . . accepting .
. . a valuable consideration in compromising or attempting to
compromise the claim . . . .” (emphasis
added)). Rule 408 of the Federal Rules of Evidence is
therefore applicable, even though MassMutual was not a party
to the DOJ Settlement. See Portugues-Santana v. Rekomdiv
Int'l, 657 F.3d 56, 63 (1st Cir. 2011) (“[Rule
408's] prohibition applies equally to settlement
agreements between a defendant and a third party and between
a plaintiff and a third party.”); see also McInnis
v. A.M.F., Inc., 765 F.2d 240, 247 (1st Cir. 1985).

MassMutual
argues that, unlike the DOJ Settlement itself, the DOJ SOF is
admissible. MassMutual contends Rule 408 does not bar factual
admissions attached to a settlement agreement, relying on
Zucco v. Kane,789 N.E.2d 115, 120 (Mass. 2003).
This court, however, is neither bound nor convinced by
Zucco's reasoning as applied to Rule 408 of the
Federal Rules of Evidence. First, the Supreme Judicial Court
in Zucco applied a state common law rule on the
admissibility of settlements, not Rule 408 of the Federal
Rules of Evidence. As the admissibility of settlement
agreements is clearly a procedural issue-and MassMutual has
not argued otherwise-Zucco's discussion of a
state common law rule is immaterial. See, e.g.,
Carota v. Johns Manville Corp., 893 F.2d 448, 450
(1st Cir. 1990). Second, contrary to MassMutual's
argument, the analysis in Zucco did not turn on the
difference between statements contained within a settlement
and those contained within separate documents attached to
settlements. Rather, the Supreme Judicial Court explained
that “[a]s applied to acceptances . . . the [state]
rule does not extend beyond the fact of the settlement
itself.” Zucco, 789 N.E.2d at 120. It later
explained that “the admissions at issue here were made
on the face of a settlement document, not during the
negotiations that produced the agreement.” Id.
The key “distinction, ” according to the Supreme
Judicial Court, was “between statements made during
negotiations and statements attached to [or included within]
a settlement, ” id., but that distinction is
not relevant for purposes of Rule 408. See Advisory
Committee Notes to Rule 408, 1972 Proposed Rules
(“While the rule is ordinarily phrased in terms of
offers of compromise, it is apparent that a similar attitude
must be taken with respect to completed compromises when
offered against a party thereto.”). Furthermore, at
least one secondary source explicitly states that
Zucco's analysis “does not comport with
Rule 408.” 2 Christopher B. Mueller & Laird C.
Kirkpatrick, Federal Evidence § 4:57 (4th ed.), at n. 18
and corresponding text.

In
effect, acceptance of MassMutual's argument would result
in a return to the common law rule, where admissions of fact
made in negotiations were generally admissible; this is what
Rule 408 was meant to displace. In the process of enacting
Rule 408, the Senate rejected the House's proposed
changes, which would have “reverted to the traditional
[common law] rule.” Advisory Committee Notes to Rule
408, 1974 Enactment. Moreover, as Credit Suisse argued at the
hearing, the DOJ SOF is inextricably intertwined with the DOJ
Settlement. In fact, the attached DOJ SOF is only
“acknowledge[d]” by Credit Suisse in the DOJ
Settlement itself. (Dkt. No. 369, Ex. 35 at 1.) Accordingly,
the DOJ SOF would not have existed but-for the DOJ
Settlement. See Ramada Dev. Co. v. Rauch, 644 F.2d
1097, 1107 (5th Cir. 1981) (explaining that the exception in
a prior version of the rule-stating the rule “does not
require exclusion of any evidence otherwise discoverable
merely because it is presented in the course of compromise
negotiations”-“does not cover the present case
where the document, or statement, would not have existed but
for the negotiations”) (cited with approval in Advisory
Committee Notes to Rule 408, 2006 Amendment); see also
Farnham v. Walmart Stores East, L.P., 2014 WL 6908907,
at *4 (D. Me. Dec. 8, 2014). In the end, the letter, policy,
and development of Rule 408 demonstrate that the DOJ SOF
(along with the DOJ Settlement) is inadmissible.

As
MassMutual's motions rely entirely on the DOJ SOF, they
must be denied. See Fed. R. Civ. P. 56(c)(2)
(“A party may object that the material cited to support
or dispute a fact cannot be presented in a form that would be
admissible in evidence.”). However, at trial MassMutual
may still present the underlying evidence which forms the
basis for the facts contained within the DOJ SOF, if
otherwise admissible. In other words, as the parties have
acknowledged, the underlying evidence is not
“immunized” simply because it was presented or
utilized in the DOJ settlement process.

[1] These actions constitute two out of
eleven related actions brought by MassMutual in 2011 against
various defendants. Credit Suisse is the only remaining
defendant in these two actions, which have been combined for
scheduling purposes on a single track. (See
11-30047, Dkt. No. 326; 11-30048, Dkt. No. 360.) The three
remaining actions (11-30044, 11-30126, and 11-30285) have
been placed on a separate, slightly delayed track.
(Id.)

[2] In these motions, MassMutual does not
seek to establish the materiality of any purported
misstatement or omission but, instead, leaves the ...

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